ETHNews had the opportunity to sit down with Ken Brook, CEO of VidRoll, to discuss how his team’s new Ethereum blockchain initiative, adChain, is setting out to disrupt the world of online advertising by adding transparency and fairness to this opaque industry.
ETHNews: Your primary company is VidRoll. Can you tell us what VidRoll is and how it has led you to your new Ethereum initiative, adChain?
Ken Brook: VidRoll is a video advertising technology company and we work directly with content publishers to help them generate advertising revenue from their audiences and users. For example, if you have a website, blog, or mobile app, we provide the technology to generate revenue from video advertisements.
adChain is our blockchain initiative. Over time I've learned that the online advertising world is in a state of distress, and a lot of the challenges that we were facing day to day was something that we saw as an opportunity. So we began exploring new technologies to help fix or, at least, take on these challenges. We saw a clear path forward in terms of deploying and iterating blockchain technologies that layered on top of what we eventually settled on as the most suitable blockchain for our needs, which was Ethereum.
E: Can you talk a bit more about the challenges that online advertisers are facing today and why there is a need to explore solutions like Ethereum?
KB: Well fraud, in particular, is a major issue costing online advertisers an estimated 8.2 billion dollars per year. Much of this fraud is due to a lack of transparency. Also, when you compare the way our industry has evolved- it has been slow compared to the evolution of the internet as a whole. There are gaps in our industry that have formed and a lot of bad actors are exploiting these gaps. And as our industry becomes more centralized there are only a handful of companies that essentially monopolize the market. 85 cents of every dollar spent on online advertising goes to Facebook or Google.
When you think about it, a lot of the internet is powered by ad-supported media and in order to ensure premium content remains free, there needs to be this ad-supported model. But the current ad-supported model is imbalanced and definitely not transparent. Which takes us back to why we began exploring blockchain technologies in the beginning- as a way to plug in these gaps with the new technology and solve problems to make our industry more efficient.
E: 85 cents for every dollar spent going to Facebook and Google is a large percentage. Could Ethereum and the blockchain potentially stop that? And if so, how might adChain play a role in that?
KB: In my mind, it's not necessarily about stopping them, it's really just democratizing the access to content and not have to be forced to trust their algorithms and what is displayed to you on their network. When you look at it, as a centralized for-profit company that controls your data and the content you see, there is this element of trust that people forget about. When they go to Facebook they're checking news articles, their Facebook friends’ pictures, and posts, but they don't think about the underlying algorithms that power everything that goes on behind the closed wall of Facebook.
You have these algorithms that are designed to maximize profit and it's not in the best interest of the user. If anything, it's exploiting the user's data and selling it to advertisers. This company is one of the most profitable companies in the world. Why is that? I feel like people don't ask that question enough. We should really look at how we're accessing content and what algorithms put that content in front of us. Where do these algorithms take us? If we just look at the content and believe it as truth and don't ask questions, it's a slippery slope that could lead to a scary future.
E: As discussed, Facebook and Google's revenue model is designed to leverage user data by selling it to advertisers. How will adChain's revenue model either resemble or differ from those other companies’ revenue model?
KB: The difference between adChain's model and Facebook and Google is that Facebook and Google decide how much is paid out and how much to sell it for. They dictate their profit margins and it's usually at the expense of its users. Our model is about creating a healthy ecosystem that is balanced, market driven and that has a built in mechanism for self-sovereignty. The main difference on adChain is if you provide your data willingly to advertisers, then you as the individual are compensated fairly for that data based on market demand and free market mechanics.
Also, adChain is distributed and decentrally owned. But centralized around one source of truth, which is the Ethereum blockchain. The Facebook/Google model is that there is this data store that we are using that currently is being sold, but from centralized tech stacks and data stacks and they’re siloed and you can't audit that. But what adChain is doing is acknowledging the fact that this is all first-party data and it should be owned by that party, and how it's sold is up to them. How much it's sold for is up to them. If there is demand for that data then it will be purchased and at what price is whatever the market decides. And those market mechanics is something that we don't control. Our (adChain's) algorithms that we write are not controlling that.
E: How will adChain's primary function on the Ethereum blockchain be defined?
KB: At a high level, the primary focus of our efforts is going to be the development of Dapps (decentralized applications) that will sit on top of adChain, which is essentially the platform. This foundation will address the fundamental issues of online advertising today. These Dapps that sit on top of adChain will make up the new online advertising ecosystem.
If you look at it like the spoke-hub distribution model, [which is a system of connections arranged like a wire wheel in which traffic moves along spokes connected to the hub in the center], adChain would be a spoke of the Ethereum hub. And that spoke is the platform Dapps are built on. But that second-order effect of Dapp development becomes enabled by the protocol layer. We will also be doing an Ad Token launch to standardize the means of exchange on the protocol.
Also, within adChain, reputation exists in a system that can't be doctored for the benefit of one in an unfair way. It allows us to be a participant in this online advertising ecosystem, but also as a developer. These new Dapps are what’s going to drive the value and create a healthier ecosystem for the online advertising space.
E: Is adChain collaborating with any other players within the Ethereum community?
KB: Yes, currently we are working with ConsenSys utilizing several of their projects, one of which is called uPort. We’re leveraging uPort for our identity solution. Part of our development roadmap is piecing together other projects that exist, or are currently being developed, to ensure that we have the best possible solution. Since the problems we are tackling are vast, we need to focus on bringing in the best for each component, and you can't do that with just one team or one project. That is what I really love about the Ethereum community. Over the last year, we've met and collaborated with some amazing teams. Being able to come together to accomplish a shared goal is pretty awesome. I've met some of the most intelligent people ever, that are working on some of these projects, and that's magnetic. We’re working on a lot of different problems and are going to need to lean on the community to solve them.
E: Ethereum definitely is a magnetic project. And there is a lot of speculation about what the major draw for widespread adoption will be. How do you see things playing out? Will it be a slow and steady pace of adoption or over a lengthy amount of time? Or do you think a killer Dapp will emerge onto the scene that will transform public opinion overnight?
KB: From my perspective, I don't think it's going to be a slow boil, but I also don't think it's going to be this abrupt revolution. I think adoption will occur somewhat unknowingly to the general public. I think it's slowly going to integrate into the mainstream systems and I think users may likely find themselves using an interface that leverages Ethereum technologies, Dapps, or other protocols without them even knowing what the blockchain is. I think adoption can still be achieved without being on the front page of the Sunday news. But I think by that time, Ethereum will have gained widespread traction and the applications will be far reaching. Once local developer communities- here in L.A for example- once they start to actively participate in projects, write smart contracts, and build out Dapps, that’s when you're going to see this shared mindset and explosive growth for Ethereum. But I think in the future a lot of people will be using applications with underlying blockchain technologies and they won't even know it.
E: What is the current timeline for adChain's implementation?
KB: Right now we are still in development. But we are looking to start releasing in January 2017 and showcasing the scalability and value that adChain's specific implementation brings to the online advertising space.
E: Fantastic, we look forward to it! Lastly, if you made a prediction about what online advertising will look like in ten years, what would it be?
KB: Wow, ten years… That seems like a lifetime. That depends on a lot of things. But one thing I'm certain of is that if nothing changes over the next ten years, then the future of online advertising will be a scary place. And I think if things don't change fundamentally, the government will step in to regulate because centralization and fraud are becoming such an issue.
If I were to be optimistic about the future, and knowing what we are doing with adChain, I'm hopeful that we are going to change the industry. Once we have adoption and the industry welcomes this new utility, then it’s a matter of how we approach the development of value.
If we can provide the opportunity for an independent entity to operate in a healthy, online advertising ecosystem, that adds value to the supply chain instead of just extraction. Then over time we will have an emerging ecosystem of Dapps that de-incentivizes fraud and malicious intent and gives value back. This virtuous value exchange is what I hope the industry looks like in ten years.
ETHNews will be following adChain as it releases more information about its protocol in January of 2017. Stay tuned for a follow-up story once more development and adoption surfaces about this cutting edge project.